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Retirement benefits are one of the trickier assets which come into play during property division in divorce. There are numerous reasons as to why this is the case. One reason is because additional rules and regulations apply to retirement benefits. For instance, when retirement benefits are divided, this division requires something called a “Qualified Domestic Relations Order,” or QDRO, to make it official. Federal laws also frequently apply to retirement benefits, and this can further complicate a given case.
Retirement benefits can be privately divided as part of a marital settlement agreement (MSA) in Maryland. This is often the preferred route for many divorcing parties, as the parties are able to move away from whatever default rules would ordinarily apply.
In Allred v. Allred (2019), the parties divided the husband’s retirement benefits within a MSA. The unique aspect of this is that, within the MSA, the parties agreed to an “investment experience” portion of the benefits for a specific time period, which would be due to the wife (and the husband taking the balance). Essentially, the case boiled down to a contract interpretation issue. Let’s take a look at this important case.
Facts of the Case
The parties were married in 2004, and the divorce was initiated on March 1, 2013. As mentioned, the parties developed and signed a marital settlement agreement which included the husband’s retirement account. Within the agreement, the language specified that the wife would receive a certain fixed amount of the marital portion of the retirement account, plus the “investment experience” from March 1, 2013, until the date of the final divorce judgment. In other words, if the retirement account increased from March 1, 2013, until the date of the divorce judgment, the wife would receive a share of that increase. The husband would ultimately receive the balance as of the final divorce judgment.
The wife later contended that the proper interpretation of the MSA was that her “investment experience” included a period of time after the date of the final divorce judgment (which occurred on July 30, 2014). The husband argued the opposite position, and contended that the plain language of the MSA indicated that the investment experience ended with the date of the divorce judgment. The wife initially won at the trial court level and then the husband appealed.
Outcome & Discussion
The appellate division concluded that the trial court erred in extending the investment experience portion of the retirement benefits beyond July 30, 2014, the date of the divorce judgement. Although the wife cited several cases in her argument, and used some strong reasoning abilities, the appellate court ultimately stated that the plain language of the contract was unequivocal in cutting off the investment experience on the date of the final divorce judgment. The wife tried to argue that the parties actually intended for the investment experience to extend longer, and that this intention should inform the interpretation of the contract. The appellate division stated that the first practice is to always defer to the plain language of the contract, and interpret terms in a manner consistent with what a reasonable, impartial person would think. In this case, since there was no compelling reason to deviate from this first practice, the appellate court concluded that the language of the contract was sufficiently clear, and therefore the trial court erred.
Contact the Murphy Law Firm for Additional Information
To learn more about the division of retirement benefits, the handling of the division of retirement benefits within a marital settlement agreement, or any other related matter, contact one of the family law attorneys at the Murphy Law Firm today by calling 240-219-5243.
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